HSBC commits $100 billion to combat climate change

London
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London-based HSBC, which claims its home markets as Hong Kong and the United Kingdom, announced on Monday it was committing $100 billion toward financing low-carbon projects, as well as promising to get all its power from renewables by 2030.

According to the press release, the bank pledges to provide $100 billion in sustainable financing and investment by 2025. The goal is one of five new commitments that HSBC is making to tackle climate change and support sustainable growth in the communities it serves.

Besides intensifying its support for clean energy and low-carbon technologies, HSBC will also increase its support for projects that support the implementation of the United Nation's Sustainable Development Goals. Additionally, HSBC pledges to:

1. Source 100 percent of its electricity from renewable sources by 2030, with an interim target of 90 percent by 2025. By signing long-term agreements with suppliers, HSBC aims to support the development of new renewable power facilities.

2. Reduce its exposure to thermal coal and actively manage the transition path for other high-carbon sectors. This includes discontinuing financing of new coal-fired power plants in developed markets and of thermal coal mines worldwide.

3. Adopt the recommendations of the Task Force on Climate-related Financial Disclosures to improve transparency. In its next two Group annual reports, HSBC will give more details on its approach to climate-related risks and opportunities.

4. Lead and shape the debate about sustainable finance and investment. This includes promoting the development of industry-wide definitions and standards

Group Chief Executive Stuart Gulliver said: “For more than a decade, HSBC has helped clients break new ground in the green bond markets in Europe and Asia, and to finance some of the biggest climate-friendly infrastructure projects in the world. The $100bn commitment that we are announcing today acknowledges the scale of the challenge in making a transition to a low-carbon future. We are committed to being a leading global partner to the public and private sectors as they make that transition.”

Two men use ATM machines at an HSBC branch in Hong Kong on March 4, 2013

While based in the U.K., the bank's operations are increasingly concentrated in Asia. The move is just the latest attempt by many of the world's biggest banks to not only respond to climate change but to address investor concerns about the associated risks from a warming climate.

HSBC's commitment follows JPMorgan Chase, ING and Deutsche Bank, but does not go as far as other banks in making a worldwide commitment to green investments. While Daniel Klier, HSBC’s head of strategy says the bank's pledge may be the largest kind by a European or Asian lender, it does come up short for a reason.

China is the world's top polluter but also its biggest investor in renewable energy and it has pledged to reduce its reliance on carbon-belching coal and clear the toxic smog from its cities

Nicolas ASFOURI, AFP

This is because HSBC has left the door open to financing new coal-fired power plants in developing countries. Klier said HSBC’s greater exposure in Asia, where coal usage remains highest, made such a step harder to take, according to the Financial Times.

“For now, coal is such a fundamental part of power generation in many developing countries where we operate that we do not think it is the right thing, from a social or economic perspective, to withdraw,” he said. “What we want to do is work with clients to make sure that, when they build new plants, they are the cleanest possible and to work with investors in those markets to develop renewable resources.”

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,900 offices in 67 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2.5 trillion as of September 30, 2017, HSBC is one of the world’s largest banking and financial services organizations.